Six Companies in One Night! Three Key Signals Behind the Intense Wave of Regulatory Fines

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Full regulatory oversight of listed companies continues to advance. On the night of March 20 alone, six listed companies were investigated and fined.

Some are newly under investigation, such as *ST Aowei (rights protection), while others have received prior administrative penalty notices, like ST Dongshi (rights protection), Hongtao 3 (Shenzhen Hongtao Group Co., Ltd.), and some have final administrative penalty decisions issued, such as ST Mingcheng (rights protection), *ST Mubang (rights protection), and R Changkang 1 (Changjiang Runfa Health Industry Co., Ltd.).

Just from their stock abbreviations, it’s clear these companies are already entangled in issues. The lighter ones are marked with ST (special treatment/other risk warnings), the more serious are on the brink of delisting with *ST, and some have already delisted but still face strict penalties.

Looking at the penalties for these six companies, three major signals are worth noting.

Signal 1: Strict investigation of financial fraud— even if the company corrects itself after the fact, penalties still apply. For example, ST Dongshi was investigated and fined mainly due to false disclosures in its 2022 annual report. Although ST Dongshi voluntarily issued a correction announcement on April 30, 2024, it was still fined a total of 4.4 million yuan.

Signal 2: Delisting does not exempt from penalties—whether the company is delisted or still listed, investigations and punishments continue. *ST Aowei was delisted by the Shenzhen Stock Exchange on the same day it was investigated; Hongtao 3 and R Changkang 1 were delisted as early as August 15, 2024.

Signal 3: Violations involving misappropriated funds must be repaid, and repayment does not exempt from penalties— and penalties may still be imposed even after repayment. *ST Mubang, for example, had a related-party non-operating fund occupation of 1.204 billion yuan in 2024. The funds were fully repaid by November 2025, but the administrative penalty decision issued shortly afterward still listed this as a reason for punishment.

It’s important to note that while the China Securities Regulatory Commission (CSRC) is cracking down comprehensively on various issues in listed companies, financial fraud remains a top priority. CSRC Chairman Wu Qing emphasized at the 2026 National Two Sessions economic-themed press conference that efforts will be increased to investigate financial fraud, strengthen joint efforts with third parties involved in fraud, strictly enforce delisting requirements for fraudulent companies, and eliminate “bad apples” to break the “ecosystem” of financial fraud. This indicates that more companies involved in financial misconduct and violations will be uncovered and severely punished. As issues are gradually cleared, the overall quality of listed companies will further improve.

Image source: IC photo

Six companies investigated overnight—what common problems do they share?

On March 20, the capital market once again saw a series of regulatory fines.

*ST Aowei, ST Dongshi, ST Mingcheng, *ST Mubang, along with delisted R Changkang 1 and Hongtao 3, all disclosed regulatory updates on the same day, involving investigations, prior notices of administrative penalties, and formal penalty decisions.

The concentration of six companies being named in one night is no coincidence, reflecting two core issues currently under regulatory focus: financial fraud and fund occupation.

Financial fraud is among the most severe and widespread problems, causing many companies to stumble.

*ST Mubang’s fraud is particularly shocking. Its subsidiary fabricated sales of silicon materials and monocrystalline furnace business, leading to an inflated profit of 159 million yuan in the 2023 annual report—accounting for 536.60% of the disclosed profit for that period. This means *ST Mubang actually suffered a loss but falsely reported profits to “turn losses into gains.”

ST Dongshi, in 2022, failed to account for land lease transactions of its subsidiaries, resulting in inflated profits of 9.4029 million yuan and 18.931 million yuan in its semi-annual and annual reports, respectively. Although it voluntarily issued a correction announcement in April 2024, this post-error correction did not exempt it from penalties.

The delisted Hongtao 3 also had false performance forecasts, predicting a net loss of 350 million to 650 million yuan for 2023, while the actual loss was 1.404 billion yuan, a serious discrepancy.

ST Mingcheng’s financial fraud was more covert and ongoing. Its 2021 annual report artificially inflated income by 98.42 million yuan through its La Liga football rights business, while underestimating inventory and goodwill impairments by 98 million yuan and 213 million yuan respectively, totaling inflated profits of 409 million yuan, severely distorting its operating results.

Another common issue is related-party non-operating fund occupation and illegal guarantees, which can drain a listed company’s assets and harm minority shareholders.

The most typical case is R Changkang 1, which has been problematic since 2021. It and its subsidiaries transferred funds through intermediary bank accounts and bill circulation, continuously funneling money to the controlling shareholder Runfa Group. In 2022, the occupation amounted to 79.01% of its disclosed net assets. To conceal this, R Changkang 1 even manipulated its financial statements by underreporting liabilities, leading to understatements of liabilities by 1.188 billion yuan in 2021, 1.188 billion yuan in 2022, and 1.353 billion yuan in the first half of 2023.

*ST Aowei is also deeply involved in fund occupation, with about 189 million yuan still outstanding as of December 2025, and issues of illegal guarantees for the controlling shareholder’s control of the company.

ST Dongshi faces dual issues, having been investigated twice in 2023 and 2025. In 2021, it purchased new energy vehicles from related parties for 429 million yuan; in 2023, it paid a total of 128 million yuan in non-operating funds to related parties for capital and interest, constituting non-operating fund occupation.

The delisted Hongtao 3 also failed to disclose the judicial freezing of its controlling shareholder’s shares in a timely manner, and its chairman knew about it but did not organize disclosure, constituting a major omission in information disclosure.

Behind the dense fines, three major regulatory signals emerge

Beyond common issues, companies also show different violations, reflecting deeper regulatory trends.

From *ST Aowei’s investigation and delisting on the same day, to ST Dongshi’s second investigation, and even delisted companies still being fined, three clear signals stand out.

Signal 1: Financial fraud is under strict scrutiny— voluntary correction does not exempt from responsibility.

*ST Dongshi exemplifies this. Its core reason for penalties was the inflated profits in its 2022 semi-annual and annual reports—940,000 and 1.89 million yuan, accounting for 30.97% and 82.33% of the disclosed profits. Despite voluntarily issuing correction notices in April 2024, this did not change the fact of disclosure violations, and the company and responsible individuals were fined a total of 4.4 million yuan.

Similarly, *ST Mingcheng issued correction notices for prior accounting errors in June 2022, but its illegal activities—overstated income and understated impairments—were still held accountable, with fines totaling nearly 15 million yuan.

This shows that regulators now focus on whether fraud occurred, not just whether it was concealed.

Signal 2: Delisting does not exempt from penalties— investigations and punishments continue regardless of delisting status.

*ST Aowei was delisted on the same day it received a notice of investigation, due to its market value being below 5 billion yuan for 20 consecutive trading days, exemplifying “investigation equals delisting.”

Even companies that have already delisted are not immune—Hongtao 3 and R Changkang 1 were delisted on August 15, 2024, but regulatory authorities continued investigations and issued fines.

R Changkang 1 and its controlling shareholders were fined a total of 25.5 million yuan, with individual fines reaching 27.8 million yuan, and the former chairman and vice chairman received lifetime securities market bans. Hongtao 3 was fined 13.4 million yuan for failure to disclose share freezing and false performance forecasts.

From “investigation on the delisting day” to “long-delisted companies still fined,” regulators are making it clear: delisting is no “get out of jail free” card.

Signal 3: Misappropriated funds must be repaid, and even after repayment, penalties still apply.

*ST Mubang’s case is most illustrative. In 2024, the non-operating funds between *ST Mubang, its controlling shareholder, and other related parties totaled 1.204 billion yuan, accounting for 128.98% of its audited net assets. Although the funds were fully repaid by November 2025, the administrative penalty issued in March 2026 still listed “failure to disclose related-party transactions” as a core violation. *ST Mubang and six responsible persons were fined 22.5 million yuan, with the controlling shareholder fined 8 million yuan and banned from securities trading for six years.

This clearly shows that regulators’ attitude toward fund occupation has shifted from “recover the money” to “penalize violations, even after repayment,” aiming to fundamentally curb major shareholders’ encroachment on listed company assets.

From these three signals, it’s evident that current regulation has formed a “comprehensive coverage, zero tolerance, and strong deterrence” three-dimensional enforcement pattern. The intense investigation of six companies overnight demonstrates that the crackdown on information disclosure violations has become a normalized high-pressure campaign. Whether it’s financial fraud or fund occupation, whether companies are delisted or not, whether they voluntarily correct or not—any crossing of the red line will not escape accountability. This not only sends a clear message to the market but also strongly protects investors’ legitimate rights and interests.

(Author: Cui Wenjing, Editor: Bao Fangming)